All Forum Posts by: Jim Watkins

I have a house I inherited in 2015 free & clear. I am trying to find a hard money lender who will lend on a property that is owner occupied. The current comps support an ARV of $210,000 to $225,000. I am looking for approximately $30,000 to $35,000 to cover all repairs/expenses. My intent is to have the repairs completed within 90 days and list it for sale. Again, I have 100% equity in the house.

I was asked why I don't get a home equity loan and the reasons are 1) My credit probably shows me to be a "ghost" since I have not had any sort of credit in the last 7-8 years and 2) I have worked for myself for the last decade and my income is usually in cash so, it would be impossible to prove any consistent income.

I never would have thought that getting a short term loan under my circumstances could be difficult to put together. Especially given the fact that I already own the house and don't owe anything on it.

I am located in Dallas, Texas.

New investors may see my reply as "negative" but, seasoned investors may see it as "realistic" and helpful.

I think Jon, Jason and Eric offered sound advice and I agree with what they said. I also think they were being overly polite while holding back something I suspect they know all too well...

Contacting and communicating with a homeowner in foreclosure who still lives in the house is what I consider to be one of, if not the most difficult task a real estate investor can ever face. This thread has had several people offer advice based on common sense and logic and thats all great...BUT...
What new and inexperienced investors never seem to realize is that common sense and logic are two things that homeowners don't listen to.

Why do I say that?

It's not a house to them as it is to us. It is their HOME and choices and decisions they make about their home tend to be based entirely off of... Emotion.
No matter what way you look at it, it is not your home. When the owners are still living in their home that late in the process, that is a clear sign to me that they are not going to attempt a sale or a short sale so they can "save" their credit or prevent a foreclosure from going on their record. Their credit is usually shot by that point anyway and unless you go at them with a way for them to keep their HOME, what incentive do they have to hand over their equity and their memories to someone who obviously will benefit from their misfortune? 99% of the time they will see you as a shark.

I am not saying that I don't think you should try to approach them. What I am saying is to approach them in a way that most others don't.
My experience has shown me that I benefit a lot more when I approach them with the intention on HELPING them (not their credit) in any way I can. In my book, a deal is defined as a situation where both parties benefit. I have lost out on many deals because I backed off when I realized that I was the only one who would benefit. Some investors might laugh at me for that and they have every right to do that when looking at the deal from a business standpoint.
As I have said many times in the past and continue to stand by it... Yes, real estate is a business about houses but, I think most investors get farther and end up well rounded when they remember that PEOPLE live in those houses and its the people we need to relate to... Not the houses or the situation the houses are in.

Approach the owners as someone you want to help. You may find that when you are able to help them... You end up helping yourself in ways you never thought possible.

Good luck

Seasoning is an issue that can really hurt an investor. By the time an investor learns what Seasoning is...The deal is usually in serious trouble.
The times seasoning usually hurts investors is when they have fixed the house and are trying to sell it. A LOT of lenders have seasoning requirements and FHA & VA (unless it has changed) require 6 months of seasoning.

What is Seasoning?
Seasoning is the length of time a person is the owner of a property or is on title as owner. So if you own a property for 5 months, then the title is 5 months seasoned.
Lenders use seasoning to ward off flippers. They get nervous when someone buys a house for $50,000 and turns around to sell it two months later for $100,000. Even though a house was renovated and is actually worth $100,000, the lenders still want proof because they don't want to find out after they funded a loan that the house is still worth only $50,000 but, they loaned $80,000 on it.

What many people (even some staff people with lenders) don't know is that seasoning is NOT required (FHA & VA is) or mandated. It is "suggested" that lenders abide by self imposed seasoning guidelines. My experience is just about every big bank and mortgage lender sticks to some self-imposed seasoning guidelines. Most tend to be six to twelve months but, some are less.

This has been my approach to seasoning with houses that I have rehabbed and tried to sell...

First, I work closely with "investment mortgage brokers" because, they tend to have better relationships with lenders that don't have strict seasoning standards and often times they work with smaller lenders or private lending groups that don't require seasoning at all.
There is usually a catch though. The interest rate tends to be higher. Sometimes two to three points above prime.
Remember that seasoning really affects the person trying to buy the house from you when their loan officer has been shopping their loan application to the big banks that also offer commission incentives on certain programs that loan officers can make more money on.
When the buyer finds out that Wells Fargo won't fund the loan because the house has only been seasoned four months... The buyer backs out and looks for another house, leaving the investor (seller) scrambling with increased holding costs.

So, any house I plan to re-sell I immediately assume that FHA & VA financing for a buyer will not be an option. That can translate into a lot of qualified buyers that aren't candidates to buy your house.
I make sure the listing agent is aware of the potential seasoning issues and have them note on the listing that interested buyers are likely to encounter seasoning issues for funding if they use their own bank, lender or mortgage broker or loan officer. Also, note that FHA & VA will not be options until title is seasoned six months.

Because of the potential funding issues a buyer will face with seasoning, I will offer an incentive to the buyer if they work with my investment mortgage broker for their loan. Sometimes it means I cover closing costs for the buyer. Other times I will offer a seller allowance which gives cash to the buyer at closing and I have also compensated the buyer by paying several months of their mortgage because of the higher interest rate a buyer is likely to have.

Bottom line... Disclose! Be upfront about the pitfalls that can come up and find a competent broker who deals with a lot of investment loans because, they know which lenders will loan and which ones stick to their seasoning rules.

Hope it helps.

Jim

No disrespect to either Kathy or Becky but...

While Kathy is commenting on something that IS possible and she is correct... I have to say that I don't feel that attempting to buy the note in Becky's case, would be the best option.

Based off of what Becky has said thus far, I would guess that she is fairly new to the business.
Buying notes is not an entry level job. I think it requires a good amount of skill and experience to do.
Giving Becky the benefit of the doubt, lets say that she was able to buy the note. She would still need to know how to proceed from that point in order to get the property. She would have to go through the foreclosure process as a lender.
I don't think this particular situation would be ideal for a new investor to break into the business.

In my mind this could be compared to an elementary student attempting to take a high school or college course.

PM me if you would like the contact info for a PI that I have referred in the past that charges well under $50.

Sorry to hear you are having a tough go with all this.

I am not a lawyer but, what the lawyer you saw, said to you does make sense. What you are after makes sense as well.
I haven't heard of any cases where a victim of fraud felt as though they won in the end. It seems there are only degrees of losing.

I agree with what Wheatie has told you about finding a way to get a lawyer. Try scanning the fraud blogs because there are lawyers who look to the blogs to find fraud victims and to let others know they are wanting to help with civil cases.

If I was in your situation, I would look for a lawyer to try to recover your money.

I would also contact or go to the FBI in person.
Their website is: www.fbi.gov

You would need to report this to the White Collar Crime department. Their homepage has information about fraud schemes as well.

I hope you are able to prevail in some way with this and please... Go to the FBI before the DA. You can file a complaint with the Attorney General as well.

Kathy had good advice for talking to neighbors, etc. When the people JUST left, its harder to find people as databases haven't been updated to show new addresses, numbers, etc.

Finding out who the lender is will not be any use to you. Until the bank owns the house, you will need the owners permission to speak to them.

Go to the Central Appraisal Distict website for the County the house is in. It will list the current owner and last known address (likely the house they just left).
Keep looking around the site for links to the County records and you should be able to do a search to find out what liens the house has filed for/against it (mortgage, etc.).

If you get to talk to the owners, simply tell them that you understand the house is vacant and neighbors indicated that they weren't coming back and you want to know if they are interested in selling. Its that simple with abandoned homeowners.

Two other tips:
1) Mail a letter to house they abandoned and write on the envelope
"return service requested" You will get the letter back and if they
left a forwarding order, the post office will list the new address on
the envelope.
2) Tape a note/letter in an envelope with the owners name on the outside
of it to the front door. Many times the owners have not gone far and
will go by the house to check mail, mow the grass, etc.

I live in Texas and in order to evict someone here you have to:

Give them a 72-hour notice to vacate.
Must be done 1 of 3 ways: By certified mail, post to the INSIDE if the front door (since you did not have access after buying it, the court allows it to be on the outside of the door) or serve them the notice in person.
I always post it on the door and take a picture of it with a copy of the current days newspaper to show the date.

After the 72 hours, you go to the JP office that has jurisdiction where the house is located and file for the eviction. Bring your documentation that you own the house and a copy of the 72 hour notice.
The JP clerk will give you a court date and in most areas, it will be within the next 10 days.

Show up in court and all you say if/when the judge asks what you want to do, just tell them that you bought the house and would like to have the occupants move.

The judge will grant the eviction and will give the occupants a 5-day appeal period.
99.5% chance they will not appeal it.
After the 5-days is over, go back to the JP court office and file for a Writ of Possession.
You will be contacted by a deputy Constable and they arrange a date/time to do the "put out."
The Constable will personally serve the writ AKA 24-hour notice to vacate.

If you end up needing to do a put out, make SURE you bring several people to move the things out of the house. They usually allow you 4 hours to complete it and the Constable will NOT help carry things out. They are there to keep everything else in order.
Bring LOTS of big, extra strength trash bags as they will be needed. Give your movers/laborers decent gloves and its a good idea to have dust masks on hand as well.

Finally.... DON'T BE LATE! The Constables hate it and some have been known to simply leave and that would force you to re-file the writ.

Well... I uh....

Anyone?

I don't quite know what to say.

I wrote this reply to post in the "Ghost Next Door" thread but decided to post it in a new thread so it wouldn't hi-jack the authors thread...

Now THIS is an interesting thread!

In all seriousness, I believe in supernatural and paranormal activities but, honestly never gave it a thought... Until last year.
(I am ducking now as I expect to get ripped for this. lol)

A house I had bought and rehabbed had "something" in it.
The house was built in 1994. Not old at all and not a house I would think would have something, not of this world, in it.
There were countless times I had been working at the house alone when I swore that I heard muffled male voices in the hallway. I never could make out any words but it sounded like talking in low voices. Every time I went into the hall to look, there was never anything there.

I also heard foot steps on a regular basis on the stairs. The house was 3200 square feet and the carpet had been removed the first day of the rehab. My point to that is there were always differing sounds and echos because there was nothing to absorb sound. I had determined that I was either stupid or nuts (maybe both) for thinking anything was in the house.... Until...

I had several people who had been working on the house during the rehab all tell me they heard the same things I did. Only, I never mentioned any of it to anyone. In other words, they all approached me with the information and none of them had spoken to the others about what they thought they heard.

The thing that made my hair stand up on end was the day I had a bathroom tiled. The contractor was there with 2 others (same company/crew) and I had not met any of them previously.
At the end of the day one of the guys was very quiet as the other two were talking as usual and when the two went out to their truck, the quiet one turned to me and said, "What the hell is in this house!?"

I asked him, "Are you a psychic?" He said that he wasn't a psychic but he was more in touch with the world around him than most people.I asked him what it was that made him wonder if there was something in the house. This was his reply...

"I was doing the grout and was on my hands and knees. Something felt eerie all of a sudden, like there was someone watching me. I began to turn my head to look behind me when I felt something move across and through me. It felt like a pocket of cold air moved right through me."What creeped me out about it more than anything was the contractor was working in a room that was directly next to the big gameroom. The gameroom was where all of the others had been working when they thought they had heard something before.
Want really creepy?
The game room was on the 2nd floor, above the garage, had a big vaulted ceiling and faced South-Southwest. In other words, the gameroom should have been the warmest room in the house. Everyone who spent time working at the house had commented at different times that the gameroom was always cold.

To this day, I don't know if there was something in that house or not.
All I can say about it is, I checked with the state and confirmed that you do not have to disclose that a house may be haunted

I just wanted to point out to all the readers/viewers on BiggerPockets, how appropriate and "Dead On" the avatar used by Eric Foster really is.

No matter how safe one may think a real estate deal is... In the end, it is always a gamble.

Great avatar Eric!